Quarterly Estimated Taxes What happens if you miss a quarterly estimated tax payment

How the penalty is figured

The IRS figures the penalty separately for each due date. For each one, it looks at how much you were short and how many days the shortfall stayed unpaid. Then it applies the IRS underpayment interest rate, which the IRS sets each quarter. For 2025 payments, the Form 2210 instructions used 7 percent a year.

A payment goes first toward the earliest due date that's still short, even if you meant it for a later date. So a late payment in June first fills the gap from April.

The penalty for each due date keeps adding up until you pay the shortfall or until the April filing deadline, whichever comes first. You can owe it even if you get a refund when you file.

The penalty worked out step by step

Say Sam's April 15 payment should have been $4,000, and Sam sent nothing until July 14, which is 90 days later. Sam and these numbers are made up.

At 7 percent a year, the penalty for April is $4,000 times 7 percent times 90 days divided by 365. That comes to about $69.

If Sam had waited until the next April to pay, about a full year, the penalty would have been about $280. Paying in July instead saved about $210.

Your own penalty depends on your amounts, your dates and the rates in effect, and the rate can change partway through the year. We figure it with you on the call, and we show you the payment that stops it from growing.

When there's no penalty

You generally won't owe the penalty if you owe less than $1,000 when you file, after your withholding and refundable credits.

You also won't owe it if your withholding and on-time payments add up to the smaller of 90 percent of this year's tax or 100 percent of last year's total tax. The last-year amount is 110 percent if last year's adjusted gross income was over $150,000, or $75,000 if you're married and file a separate return.

If you had no tax at all last year, were a U.S. citizen or resident for the whole year and last year's return covered 12 months, there's no penalty this year.

If you file your return by January 31 and pay the full balance, you can skip the January 15 payment without a penalty. Farmers and commercial fishermen have their own rules, with one January 15 due date.

Do I have to file Form 2210?

Usually not. In most cases, the IRS figures the penalty for you and sends a notice if you owe it.

You do file Form 2210 with your return when you're asking for a waiver, when you use the annualized income installment method on Schedule AI, or when you treat your withholding as paid on the dates it was actually taken out. Each of those can lower the penalty, so they're worth checking before you file.

Ways to lower or remove the penalty

Pay the shortfall as soon as you can. Every day sooner is a day the penalty isn't adding up.

If your income came in unevenly, use the annualized income method. It matches each payment to what you'd actually earned by then, which can shrink or erase the penalty for the early dates.

If you get a paycheck, raise your withholding. Withholding counts as paid evenly through the year, so extra tax withheld in the fall also counts toward the earlier dates.

Ask for a waiver if it fits. The IRS may waive the penalty if a casualty, disaster or other unusual circumstance kept you from paying. It may also waive it if you retired after age 62 or became disabled during the tax year or the year before, and the shortfall had a reasonable cause. The penalty generally can't be waived for reasonable cause alone.

If an IRS notice already came

Check which tax year and which amounts the notice shows. If something looks wrong, call the number on the notice.

If you can't pay the whole bill at once, the IRS offers payment plans, and a plan can keep later penalties smaller. A waiver request goes in writing, signed under penalty of perjury, to the address on the notice.

Bring the notice to the free 30-minute call. We'll go over it with you, line by line, against your payment records, and set the payments still ahead so the next one is right.

Questions owners ask about the penalty

Is this the same as the penalty for paying my return late? No. The estimated tax penalty is for payments during the year. Paying the balance on your return after the April deadline is a separate penalty.

Does the IRS charge interest on the penalty? Yes. The IRS says it charges interest on penalties, so it's worth paying a penalty bill when it comes.

I missed every payment this year. Is it too late to fix? No. Pay what you can now, because the days stop adding up on whatever you pay. Then we set next year's four payments so it doesn't happen again.

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